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Retail sales in Great Britain jump despite soaring inflation

Consumers in Great Britain carried on spending last month despite the highest inflation rate in 40 years, providing high street and online retailers with a surprise boost.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Consumers in Great Britain carried on spending last month despite the highest inflation rate in 40 years, providing high street and online retailers with a surprise boost.

The Office for National Statistics (ONS) said there was a 1.4% monthly jump in retail sales in April but said the trend was still weak and that part of the increase might be down to people staying in to save money.

Heather Bovill, the ONS deputy director for surveys and economic indicators, said: “April’s rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money.

“Clothing sales had a strong month, especially online, with some retailers suggesting consumers were purchasing clothes for summer holidays and weddings.”

Over the three months to April – considered a better guide to the underlying trend than one month’s data – retail sales fell by 0.3% on the previous quarter. The ONS said the trend had been down since last summer.

Even so, the rise in spending came as a surprise to the City, which had expected the arrival of higher national insurance contributions and the new energy price cap to lead to consumer belt-tightening last month. The consensus among economists was for a 0.2% drop in retail sales.

Earlier this week, the ONS reported the annual inflation rate jumped from 7% to 9% in April, while the latest snapshot of consumer confidence from GfK showed the mood at its gloomiest since its records began in 1974.

David Baker, the chief investment officer at the auditing and accounting firm Mazars, said: April’s retail sales figures beat expectations by some distance and reverse a recent trend of falling sales.

“The reading contradicts recent consumer confidence data and suggests that near full employment and the ability of consumers to tap into savings accrued during the pandemic may be preventing shoppers becoming overly cautious despite the cost of living challenges associated with high levels of inflation.”

Nicholas Farr, an economist at Capital Economics, said: “The unexpectedly strong 1.4% month-on-month rise in retail sales in April suggests that the cost of living crisis hasn’t caused consumer spending to collapse and means that the economy may have a little more momentum than we thought.”

The ONS said the volume of retail sales in the latest three months was just over 4% higher than before the coronavirus pandemic first affected the UK economy in early 2020. Over that period, the percentage of sales online has increased from 19.9% to 27%.

This article was written by Larry Elliott Economics editor from The Guardian and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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    Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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